Do you need an in-house lawyer for a startup?

Elena Mashina

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Do you need an in-house lawyer for a startup?

How can a startup successfully develop and avoid legal problems? Do I need to hire my own lawyer or enter into an agreement with a third-party company? We will answer these and other questions in this article.

Startup development is conventionally divided into five stages:

There is only an idea;
Creation of a legal entity;
Registration of rights to objects of intellectual property;
Registration of agreements with employees;
Protection of information.

You cannot do without a lawyer at each of these stages. Let's look at what questions this specialist is able to solve.

Stage one: there is an idea for a startup

Once you have decided what will form the basis of your project, you can draw up an agreement between the future owners, which spells out the rights and obligations of the parties, areas of responsibility, and a policy for the distribution of shares. The law allows the conclusion of such an agreement prior to the formal formation of the legal entity. It makes sense for the founders of the project to involve a competent lawyer who specializes in supporting startups in the preparation of this document.

It is definitely not worth using standard documents. This is not an important idea, as there are no exactly the same projects. Companies use different business models, operate in different areas, so it is impossible to create a standard agreement that would be used as a universal one and would suit everyone without exception.

A good lawyer will adapt the model agreement for your project, taking into account its specifics.

Stage two: registration of a legal entity

To conduct business officially and attract investment, you need to open a company or individual entrepreneur. Working without registration is considered illegal business activity and is a criminal offense. In the future, this may negatively affect the interaction with investors.

The lawyer will tell you which organizational and legal form of business to choose. It can be one legal entity or several. Also, the specialist will prepare a package of corporate documents that determine the structure of the company's management, the powers of the startup participants.

Stage three: registration of ownership of intangible assets

The most important value of a startup is its ideas and developments, that is, objects of intellectual property. For their legal protection, it is important to correctly formalize the copyright. In some cases, startup participants use the services of third parties. For example, if you ordered the development of a website or program, you need to legally properly formalize labor relations with the performers. This is necessary to obtain exclusive rights to intellectual property objects in order to protect yourself from their illegal use by competitors.

If someone steals or copies your development, you will have a legal basis to go to court and bring the violator to justice. The most important thing is that the documentation that confirms your rights to these assets is correctly drawn up. This will be successfully dealt with by a lawyer who specializes in supporting startups.

Stage four: agreements with employees

All aspects of the employment relationship must be documented. For this, the lawyer will prepare forms of employment contracts with staff, labor regulations and other documents.

Stage five: information protection and documenting transactions

Information is valuable, and disclosure of data can be disastrous for a startup. The task of a lawyer is to prepare agreements on non-disclosure of confidential information and other documents, on the basis of which the company has the right to call employees who do not comply with data protection requirements to responsibility.

The services of a lawyer are also required when concluding investment transactions, preparing documents when leaving a startup, and resolving other issues within the legal framework.

Why is it better to enter into an agreement with a third-party company instead of an in-house lawyer?

International corporations can afford to hire highly qualified lawyers in all countries of the world where the project is being implemented. Initially, ordinary start-ups cannot afford such services. It's not just about having to pay monthly wages. First, the in-house lawyer needs access to the entire infrastructure, which increases costs. Secondly, a full-time specialist will not have enough work and will sit idle most of the time.

Young companies cannot afford a top-notch full-time lawyer, so they are forced to hire recent law graduates. Due to lack of experience, they simply cannot cope with complex non-standard tasks.

That is why it is better to conclude an agreement with A4 Law Firm, a law firm that specializes in supporting international startups. Our experience and professionalism in resolving complex legal issues is confirmed by numerous cases.

Do you need an in-house lawyer for a startup?